'Boom! $1 million for the boys': Acquire eyed success ahead of fall

Teetering education company Acquire Learning planned to pour $1 million a month into the pockets of its shareholders including former AFL boss Andrew Demetriou shortly before its collapse left tens of thousands of students stranded.

The events leading up to the collapse of the group, and the $30 million plus in loans made to shareholders including to Mr Demetriou and his nephew, co-founder Tim Demetriou, have been laid bare during public examinations on behalf of liquidator Barry Wight from Cor Cordis.

Acquire Learning former managing director John Wall and former advisory board member Andrew Demetriou in November 2014.Credit:Pat Scala

Acquire had been a financially successful group raking in hundreds of millions of taxpayer funding up until 2016 when the federal government launched a crackdown on alleged rorts within the vocational education sector and tightened the rules for college operators and education brokers.

The Supreme Court of Victoria heard on Wednesday that Acquire Learning founder John Wall suggested the group pay off its $40 million debt to the Commonwealth Bank and "make other adjustments" to improve the group's finances and free up cash.

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This was immediately after Mr Wall and other shareholders and directors of the group were warned about the group's solvency in a document prepared by Acquire Learning's in-house finance team.

"See updated cash flow graph after a bunch of adjustments – including $1m a month for us," Mr Wall said in an email to Acquire Learning directors and advisory board member Mr Demetriou that was punctuated with smiley face emojis.

His suggestion was warmly welcomed by Acquire co-founder and former boss Jesse Sahely, who replied: "It’s actually better than before and $1 million for the boys, BOOM!”

But while the CBA debt was paid off, the plan to "get the cash out of the business" as Mr Wall said in one email was not pursued.

Within three months the warnings from Acquire's own senior management became more severe, with Mr Demetriou and other directors reminded on several occasions in the second half of 2016 of "serious consequences" including the fact "that a director faces a criminal liability (fines up to $200k or five years in prison) for allowing the company to incur debts whilst insolvent".

That same month, the court heard, Acquire's former chief financial officer James Harkness wrote to the directors and shareholders including Mr Wall, Mr Sahely and Mr Demetriou saying: "Please see attached the documents distributed at today’s meeting where I recommended appointment of an administrator, noting that one option for an administrator is to trade out as opposed to winding up the company."

Jesse Sahely in 2015 when Acquire Learning was booming. Credit:

Acquire was not placed into administration until May 2017.

Mr Sahely, who was giving evidence on Wednesday, told the court the group believed a deal with Careers Australia, a cost-cutting program and improved student services and enrolments would see Acquire come back from the financial brink.

"The real issue was that the [government funding] scheme stopped. We never planned for the scheme to stop," Mr Sahely told the court.

"I guess that was what caught us off guard. We did a lot of things to remedy that to basically save the business."

It’s actually better than before and $1 million for the boys, BOOM!

Jesse Sahely, co-founder Acquire Learning

Mr Sahely said that the group had received advice from KordaMentha in late 2016 that it was solvent. He also agreed that at that time Acquire Learning was not able to pay its bill to KordaMentha.

Mr Sahely received about $2 million in shareholder loans from the company but defended the payments, saying they were actually dividends.

He was also quizzed about why he instructed the head of finance at Acquire to pay four creditors a day before the group was placed into administration. The payments included a $41,580 payment to one of Mr Sahely's private companies.

Mr Sahely initially said he did not know the group would be going under the next day, though later added that it would have been likely that he knew the group was about to go into administration.